Trans Mountain Expansion gets final investment decision from Kinder Morgan

2016 Vancouver protest against Trans Mountain Expansion. Photo: Climate Convergence Metro Vancouver

$1.75 billion initial public offering must be concluded by May 31

One of the hottest political issues in British Columbia just got a little hotter, as Kinder Morgan Inc. announced a final investment decision – contingent upon a successful IPO – for the Trans Mountain Expansion pipeline project, scheduled to begin construction in Sept.

Ian Anderson, Kinder Morgan Canada CEO.

“Our execution planning is complete, our approvals are in hand, and we are now ready to commence construction activities this fall generating thousands of direct jobs for Canadians, including significant benefits to Indigenous communities in Alberta and British Columbia,” said Ian Anderson, president of Kinder Morgan Canada Limited in a press release.

Kinder Morgan Canada Limited is selling 102.9 million shares of common stock of its initial public offering at $17 Canadian per share for total gross proceeds of $1.75 billion. The IPO must be completed no later than May 31, 2017.

“Upon the completion of the IPO, we will have secured satisfactory financing for the Trans Mountain Expansion Project. We are excited to be moving forward on this tremendous project which is expected to benefit KMI and KML as well as our Trans Mountain shippers and Canada,” said Steve Kean, Kinder Morgan chief executive officer.

Trans Mountain Expansion is a $7.4CDN billion project (with a remaining cash spend of $6.2 billion as of March 31) which upon completion will provide western Canadian oil producers an additional 590,000 b/d and tidewater access to the western United States and global markets.

The project is underpinned by 15- and 20-year shipper commitments of 707,500 barrels per day, or roughly 80 per cent of the capacity on the expanded pipeline, with the other 20 percent reserved for spot volumes as required by the National Energy Board, the company said.

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Construction on the project is expected to begin in September 2017 with completion expected in December 2019.

The Offering constitutes a sale of a portion of KMI’s interest in the Canadian business of KMI (the Business). The Business is composed of: the Trans Mountain pipeline system (including related terminals assets), the Puget Sound pipeline, the Jet Fuel pipeline system, the Canadian portion of the Cochin pipeline system, the Vancouver Wharves Terminal and the North 40 Terminal; as well as three jointly controlled investments: the Edmonton Rail Terminal, the Alberta Crude Terminal and the Base Line Terminal.